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Cities generate barely 39 percent of funds they spend: Study

Pune tops the list of cities that have progressed in terms of city systems reforms, followed by Kolkata and Thiruvananthapuram. Delhi is at number 6, says the study.

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Weak finances, both in terms of financial sustainability and financial accountability of cities is among the most important challenges that cities in India need to address. On an average, they generate only 39 percent of the funds they spend, leaving them highly dependent on state and central government grants, says the study titled Annual Survey of India’s City Systems 2017: Shaping India’s Urban Agenda by Janaagraha Centre for Citizenship and Democracy.

The other challenges include lack of a modern, contemporary framework of spatial planning of cities and design standards for public utilities, poor human resource management, in terms of number of staff, skills and competencies of staff, organisation design and performance management, powerless mayors and city councils and severe fragmentation of governance across municipalities, parastatal agencies and state departments and total absence of systematic citizen participation and transparency, says the study.

It must be noted that the Annual Survey of India’s City Systems (ASICS) is an objective benchmarking of 23 Indian cities across 20 states on 89 questions, covering 150 parameters, 3900 points of investigation and takes a systematic, data-driven approach towards urban governance, scoring cities on a scale of 0 to 10. It also compares Indian cities with benchmark cities such as London and New York etc.

The study notes that cities presently have broken city-systems and are improving at a snail’s pace. They score between 3.0 and 5.1 while London and New York score 8.8. Johannesburg, a city from a developing country scores 7.6. Scores of benchmark cities indicate how far city-systems need to be strengthened before we can expect cities to deliver good quality of life.

As for ranking of Indian cities, Pune tops the list of cities that have progressed in terms of city systems reforms with a score of 5.1, followed by Kolkata with a score of 4.6 and Thiruvananthapuram with a score of 4.6. Delhi is at number 6 with a score of 4.4, the study says.

Cities lack a modern, contemporary urban planning framework

This may be denying citizens up to 3 per cent of GDP each year, says the report. This is primarily due to outdated town and country planning acts; weak preparation, implementation and enforcement of spatial development plans and lack of design standards for public utilities

Well-made and well-executed Spatial Development Plans (SDP) lie at the heart of economically vibrant, equitable, environmentally sustainable and democratically engaged cities. India’s cities suffer from acute lack of planning. The report reveals that several issues across the planning PIE (Preparation, Implementation and Enforcement). Outdated town and country planning acts, a large majority of which were drafted well before India’s economic liberalisation and subsequent population growth have spawned a whole range of challenges such as urban sprawls, choked mobility networks, high carbon emissions, lack of affordable housing, rising income inequality, low economic productivity etc.

India’s cities do not have design standards for roads. Roads are networks for other public utilities too-footpaths, bus stops, water and sewerage networks, storm water drains, power cables, optical fibre networks and traffic surveillance all depend on road networks. Proper design standards for roads can transform not just mobility but also other utilities, says the report.

How to fix the problem? The report suggests implementing an effective system to monitor, report and penalize SDB violations. It calls for overhauling planning acts, constituting an empowered MPC anchored by elected representatives from municipalities. And at the Central level, it calls for publishing a model planning framework and design standards for  public utilities.

Cities don’t generate enough funds to even cover staff salaries

They have grossly inadequate financial management systems. Financial sustainability of most municipalities is presently in a precarious position, says the study.

Cities need significant amounts of capital to invest in not just creating new infrastructure and catching up on service delivery deficits, but also for revenue expenditure such as operations and maintenance and hiring of talent. On average, the cities assessed in this study, generate only 39 per cent of the funds they spend, leaving them highly dependent on state and central government grants.

The study notes that for several cities, their own revenues do not even cover staff salaries. Lack of adequate own revenue sources severely constrains the ability of cities to invest in infrastructure and service delivery. However, with the abysmal standards of financial management and accountability systems existing in Indian cities today, enhancing revenues will be akin to pouring money down a leaky bucket. This is evident in the fact that no Indian city, barring Guwahati, is required to have a Medium or Long Term Fiscal Plan (MTFP/LTFP) in place. No city is required to mandatorily undertake external audit of annual accounts or internal audits.

The weak state of budget management is also evident in budget variance figures (budget v/s actuals) which on average over last three years is 36 per cent across cities and as high as 75 per cent in the cities of Raipur and Ranchi, the study notes.

Human resource management is the Achilles’ heel of India’s cities Municipalities do not have enough number of skilled staff required to meet infrastructure and service delivery needs of citizens. They also lack proper organisation design and have very poor human resource management policies, notes the study.

Cities do not have adequate number of skilled staff. Their HR policies are outdated and HR systems and processes broken. The average staff vacancy is 35 per cent, with the highest vacancy being 60 per cent in the case of Guwahati.

None of the cities has cadre and recruitment rules that contain modern job descriptions covering both technical skills and managerial competencies for each role or position in the municipality. Commissioners of cities do not possess adequate domain experience in urban management constraining their ability to deliver strongly.

On average, commissioners only have 2.7 years of experience in urban management. Medium-sized cities have commissioners with 1.2 years of urban management experience, whereas large and mega cities have commissioners with 2.9 and 4.1 years respectively. Commissioners in Ludhiana, Guwahati, Dehradun, Kanpur, Ranchi, Thiruvananthapuram and Chandigarh have less than a year’s experience in urban management, notes the study.

Mayor and Councillors in cities are toothless

Mayors and councils in our cities don’t have full decision-making authority over critical functions and services such as planning, housing, water, environment, fire and emergency services etc. On average, only 9 out of the 18 functions under the 74th CAA have been effectively devolved. Large cities such as Bhopal, Kanpur and Lucknow have a directly elected mayor with five year tenure, compared to mega cities such as Bengaluru and Delhi which have an indirectly elected mayor with one year tenure.

Mayors and councils also cannot hire and fire their own management teams, severely constraining their ability to exact accountability for performance from city officials. They have limited say when it comes to investing or borrowing monies or finalising budgets - only four cities assessed can borrow without the sanction of state governments (with a debt-limitation policy), of which one is a medium sized city and three are large cities, says the study.

Only seven cities can invest without prior state government approval, of which three are large cities and four are mega cities. Only 11 out of 23 have full independence in budget-setting. Of these 11, one is a medium sized city, six are large cities and four are mega cities. All of the above have resulted in the municipality becoming a glorified service provider, far from a local self government or a city government.

Parastatal agencies like the development authorities (which cover planning), water authorities or boards (that cover water and sewerage), transport corporations (that cover bus transport) report directly to state governments and to different departments/ministers within it. Exacerbating this fragmentation is the role of state departments, such as public works (roads) and police (traffic, law and order) which in many cities also have important roles to play in infrastructure and service delivery, says the study.

India’s cities characterised by low levels of citizen participation and transparency

There are no structured platforms for citizen participation (such as ward committees and area sabhas), no coherent participatory processes (such as participatory budgeting), weak citizen grievance redressal mechanisms and very low levels of transparency in finances and operations. All of this put together has resulted in weak levels of engagement between citizens and governments, as a consequence low levels of trust and in general poor quality of democracy in a city, says the study.

Only 10 out of the 23 cities assessed have a Community Participation Law (CPL), a reform measure introduced under the JnNURM that mandates constitution of both ward committees and area sabhas for citizen participation. Even so, while most have constituted ward committees, only two cities, Guwahati and Hyderabad have constituted area sabhas, it notes.

Citizen charters, powerful tools of accountability and grievance redressal, are missing in nine of the 23 cities assessed. Where they do exist, there is no mention of service levels, and few mention timelines for service delivery and processes for obtaining relief where service levels are not met. An ombudsman, specifically for resolving such issues, is missing in all but three Indian cities, Bhubaneswar, Ranchi and Thiruvananthapuram.

To have citizens engage meaningfully, they have to be enabled with actionable information, aspect which an open data framework addresses - by not just allowing citizens to access data more easily, but also enabling civil society organisations, the media and others to aggregate and analyse information and drive advocacy efforts around specific causes. As many as 19 of the 23 Indian cities assessed are neither mandated to nor release basic yet important data sets in an open data format, it adds.

Key highlights of the report:

55% citizens live in cities where the mayor has a term of 2.5 years or less

Only 13% cities have enacted town and country planning acts post liberalization

Only 2 cities have formed both ward committees and area sabhas

10 months is the average tenure of a municipal commissioner

54% cities do not generate enough revenue to meet their salary costs

39% is the average percentage of own revenues to total expenditure

70% cities had budget variance of over 30%

35% is the average staff vacancy
First Published on Mar 14, 2018 12:53 pm
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